Deficits must be reduced
It appears likely that the anticipated Congressional battle over the nation's debt ceiling will be pushed back to mid-May.
When the battle lines reform in the spring, however, the core problem will remain the same: so-called “entitlement” programs such as Medicaid, Medicare, Social Security and more. This is an issue of extreme political sensitivity. Few politicians dare even to offer specific suggestions about restructuring these programs let alone reduce them.
The late Herbert Stein, who preceded Alan Greenspan as chairman of the Council of Economic Advisers to presidents Richard Nixon and Gerald Ford, developed what is known as Herbert Stein's Law: “If something cannot go on forever, it will stop.”
The current explosion of the government deficits clearly is unsustainable. It cannot go on forever. If financial markets stop the deficits by shunning the purchase of Treasury securities, it likely will spell a serious downgrade of the nation's credit rating, high interest rates and great suffering. If, on the other hand, Congress reduces the deficits, the impact likely will be less destructive.
Simon Johnson, a Massachusetts Institute of Technology professor in entrepreneurship, told members of the House Ways and Means Committee that it is a “big mistake” to continue to have extended confrontation over the debt limit because of the uncertainty it creates for consumers, the private business sector and the European economy.
There is probably private Congressional agreement among many in both parties that the exponential increases in the deficits must stop. The crucial question in resolving the deep political divide is how.
Entitlement programs are so named because people feel that their financial or other contributions render them “entitled” by right to receive the payments. Although that sounds fair, there are three big problems.
The first is the increasing cost of living, especially in health care. Many costly surgical operations, such as hip replacements, did not exist when Medicare was established.
Second, demographics have changed dramatically. When Social Security and other entitlements were conceived, the average life span of Americans was much lower. Today, Americans live longer in retirement. The 2010 Census report shows seniors 65 and older are the fastest growing sector of the American population and, for the first time, form the largest portion of the population at 40.3 million. Understandably, senior citizens tend to require the most costly health care support.
Third, many retirees believe they are “entitled” to receive a return of the payments they have made into Social Security and Medicare during their working lives. However, because of protracted retirement and higher costs, retirees tend to receive far more in benefits than they contributed. With falling full-time employment, a growing number of workers are making minimal contributions.
Entitlements have to be restructured, but political gridlock continues to grip Washington.
House Speaker John Boehner's proposal to tie the debt limit extension to a pledge to withhold the pay of all members of Congress until they have agreed to a balanced budget may or may not be legal. But the idea could spark voter support for action.
John Browne, a former member of Britain's Parliament, writes about financial and economic issues for Total Trib Media. Contact him at email@example.com.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Rossi: After L.A., NFL should tread carefully
- Acme man’s ephemeral sculptures appear to defy laws of physics
- Kennywood fanatic, 82, rides Jack Rabbit 95 times in a row
- Starter Liriano strikes out 12, leads Pirates to series sweep of Mets
- Oncologists wary of scaled-back guidelines in cancer screenings
- Early success in White House race a pleasant surprise for Carson
- Cochran repair center planned in Harrison
- Neighbor arrested after McKeesport house fire, authorities say
- Memorial Day service in National Cemetery of the Alleghenies still growing
- Motorcyclist killed after striking pole in Penn Township
- A family’s flag flies again in Mt. Pleasant